Rehabbing an investment property may appear to be easy money, but there is much more planning involved than you may think. If you think you can start once you get the keys, you will already be behind the eight ball. The planning for your rehab should really start soon after you make an offer. Once your offer is accepted, it is not too early to start lining people up and getting them to commit to a schedule. The more prepared you are with your budget and your schedule, the quicker you can turn your property over. In the investing world time is not only money, but everything. Having a plan before you even start is the surest way to accommodate a successful transaction.
In most cases, the better the deal, the more work that is needed. That being said, it is important to know exactly what work is needed and who is going to do it. Depending on your work preference, you may need a plumber, a carpenter, an electrician, a painter and even a roofer. Some of these projects will get in the way of each other. If not properly planned for, they can drag on for an extra few weeks. Over time, a few weeks here and there will equal a month. The next thing you know, you are far behind schedule and losing money. It is your property and your job to get everyone in line and hold them accountable for their dates. Your bottom line depends on it.
Between the mortgage or loan repayment, insurance, taxes and utility costs, there is money being spent every month on the property, whether or not someone is living there. After the property is finished, it could be another couple of months until you find a renter or buyer. If you do not have a sense of urgency to complete the project, neither will anyone working on the property. You don’t have to be a tyrant, but you do need to be forceful with people honoring their dates and doing the work they say when they say they will do it. All it takes is one electrician or plumber to miss a week to throw everyone else off.
In spite of the best planning, there will inevitably be changes thrown at you throughout the process. You need to accept these and learn to quickly deal with them. If a curve ball is thrown at you and you pout and complain about it for a day or two and then wait a few more days to act, you are only hurting yourself. This is part of the business, especially with rehab projects, and has to be embraced. The quicker you can adjust and change on the fly, the more efficient you will be. You don’t have to be happy about it, but you should know that it will happen more than you think.
Those investors who try to just wing it after they take ownership will find they are in over their heads and cost themselves dearly. The more prepared you are, the smoother your rehab will run.